To Be Pacific: COFA 2.0 and the Power of US Denial

The sun never sets on American interests. From Cuba to the Philippines, the US has military bases and businesses around the globe. It is easy to forget, however, the intricate network of alliances that go into of maintaining the Pax Americana – especially when the combined landmass of the countries involved is smaller than that of Rhode Island. The expiration of America’s Compact of Free Association (COFA) with the island nations of the Federated States of Micronesia (FSM) and Republic of the Marshall Islands (RMI) threatens the equilibrium of Pacific power. The treaty’s termination without a framework to preserve strong economic ties could precipitate Chinese encroachment on trade routes and American military installations. To promote peaceful prosperity in the region, the US must solidify balanced and bilateral relationships with post-Compact states to keep them from falling into China’s sphere of influence.

In 1947, the UN granted the US sovereignty over islands it had seized from Japan in World War II. Pushes for autonomy eventually led to the 1986 COFA between the US, FSM, and RMI. The deal commoditized Pacific sovereignty by exchanging billions of dollars for the ability to build bases which would “strategically deny” foreign powers from entering stretches of open ocean. In 2003, two Compacts worth $3.5 billion with FSM and RMI were renewed until 2023, when an independent trust fund would take their place. The trust fund would attempt to wean Pacific states off American aid and, in turn, allow them to achieve economic self-sufficiency. The move signaled that it was very unlikely that the Compacts would receive another extension.

This alliance has not always been seamless. For decades, FSM has protested America’s inefficient aid practices and even threatened to withdraw from the agreement in 2015. On the other side, American politicians perceive the relationship as imbalanced and complain about the exorbitant sums of taxpayer money sent to faraway lands. America’s dismissal of the Compact states as a backwater has kept the expiring agreement off the public agenda. This sentiment is epitomized by National Security Adviser Henry Kissinger’s statement: “there are only 90,000 people out there. Who gives a damn?”  

"In a post-Compact Pacific, relationships with island nations must be consensual and mutually beneficial. Otherwise, without American aid, there is little to stop China from leveraging its financial power to gain FSM/RMI water access."

The truth is, all Americans should give a damn about the Compact states. The whole world should. For decades, COFA has been a pillar of America’s ideal of a world order defined by free trade. Almost 50 percent of the world’s energy commerce and one-third of global trade passes through COFA waters. America’s protection of these vital trade routes has been integral to market stability and sustaining the growth of nations around the world. The US’ unchallenged presence in the region also shortens lines of communication and potential military response times, assuring allies like Japan and ASEAN countries that America can deliver on its promises of security.

If COFA expires without a framework to preserve strong economic ties, a power vacuum could overhaul the entire balance of Pacific power. Since the 2003 renewal, China has anticipated a weaker American presence in the region. Over the past decade, Chinese trade with island states has increased by a factor of four. Its $1.7 billion in aid to nations including FSM and RMI might seem like development without strings. However, according to China’s ambassador to Vanuatu, another Pacific nation, “there is no free lunch”. China’s investment in the FSM and RMI represent a push to bring the Micronesian countries into its sphere of influence, enhancing its “soft power.” Heritage Foundation senior research fellow Dean Cheng warned that “if Beijing established a political foothold [in the region] it could persuade these states not to extend access to the U.S., as well as arrange for Chinese access”.

Although American bases will probably remain for the foreseeable future, Chinese presence in the region could jeopardize American economic, military, and political interests. China has shown an increasing fervor to expand its naval influence. In the South China Sea, another vital trade route, it has built artificial islands and driven off ships in international waters. Chinese military installations have also sparked fears of conflict and “gigantic” consequences for global trade. If the US withdrew all economic aid without a backup plan, China could pressure FSM/RMI to grant it maritime access, threatening the Right to Strategic Denial. Not only would this allow China to encroach on US military bases (in 2017, Chinese scientists placed sensors in the Mariana Trench that analysts feared could “monitor U.S. submarine activity” near Guam), but it would unsettle America’s Pacific allies. If China created an opening for military access, it could circumvent the “First Island Chain”, which Chinese strategists argue America uses to contain it from the Western Pacific. Pair this with slower lines of communication and military response times and it is easy to see why allies such as Australia, Japan, and South Korea fear an emboldened China.

As the 2023 clock ticks ever closer, the US must reach out to Compact states to negotiate strong economic ties. FSM’s threat to withdraw from the agreement prematurely reveals a discontent among Compact states, who believe that the US does not pay attention to their needs. Consequently, a bilateral deal must include concessions on the part of the United States. Whether extending medical care and/or promising visas to the thousands of taxpaying Micronesians in the United States (COFA allows freedom of movement for an “indefinite period of time” between countries), or continuing US services such as the Federal Emergency Management Agency and Postal Service (among other ideas), treating Compact nations with respect and determination to fulfill meaningful promises will help them resist Chinese pressure and ensure US influence in the region. It is unlikely that American Congressmen would renew the entire Compact, but they could explore enacting free trade agreements to foster investment while maintaining regional autonomy and dignity. In a post-Compact Pacific, relationships with island nations must be consensual and mutually beneficial. Otherwise, without American aid, there is little to stop China from leveraging its financial power to gain FSM/RMI water access. If this happens, the Western Pacific could become a hotbed of tension like the South China Sea, but with the addition of American bases and territory at risk.

America must recognize that government-to-government negotiations on equal footing have secured key interests in the past. For decades, the US used the Marshall Islands’ Kwajalein Atoll as a long-range missile test site – the only facility in the world that could do so because of its vast size. Understanding the site’s importance to American security post-2023, American diplomats negotiated the “Military Use and Operating Rights Agreement” (2003) with RMI, which allowed the Department of Defense to continue operations until 2066, with an option to extend it until 2086. In return, the US offered a hefty aid package of millions of dollars per year to “address the special needs of…Marshallese communities within Kwajalein Atoll.” It is time for America to view COFA’s economic codependence in the same vein.

The US must pursue balanced deals to maintain strong economic relations with Pacific states. To maintain unhindered trade, protect military installations, and safeguard the peaceful status quo, it must acknowledge the successes and costs of bilateral deal-making with island nations. A full economic withdrawal could open the door for Chinese aggression. As COFA’s expiration advances, American politicians will have to determine how much Pacific peace is really worth.

Photo: “Fleet of Ships

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